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Chiquita Brands, Fyffes Lift Merger Savings Goal

Written by: Renee Cordes08/27/14 - 9:25 AM EDT

Tickers in this article:
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NEW YORK (The Deal) -- Reaffirming their commitment to walk down the aisle, Chiquita Brands International and Fyffes plc said Wednesday, Aug. 27, that they could complete their merger as early as October and had identified an extra $20 million in expected synergies from the fusion.

The update comes after Chiquita rejected a surprise $611 million takeover offer earlier this month from orange juice maker Cutrale Group and Safra Group, the Brazilian investment group led by billionaire Joseph Safra. The approach came more than five months after Chiquita, of Charlotte, N.C., and Dublin-based Fyffes agreed to join forces to become the world's leading banana producer.

"Chiquita and Fyffes remain committed to the transaction and are continuing to work together to complete the combination as expeditiously as possible," Chiquita CEO Ed Lonergan and Fyffes Chairman David McCann said in a statement on Wednesday.

The companies are now predicting at least $60 million in pretax synergies by the end of 2016, after identifying an extra $20 million from sourcing, shipping and IT functions.

They expect to achieve half of the $60 million in synergies in the first year after merging, and the rest by the end of the second year.

Earlier this month the companies notified their March deal to the European Commission, which has given itself until Sept. 19 to wrap up its routine one-month investigation. While the companies initially gave an end-of-year completion timetable, on Tuesday they said that October is "possible."

Fyffes shares rose 4.9% in Dublin Wednesday morning to just below 0.97 euros, while Chiquita shares closed at $14.07 in New York, on Tuesday, little changed from Monday.

Post-merger, Lonergan will serve as chairman of ChiquitaFyffes and McCann, whose family has run Fyffes since the early 20th century, will be CEO.

ChiquitaFyffes will have close to $4.6 billion in 2013 sales and be listed on the New York Stock Exchange. The combined company will surpass Westlake Village, Calif.-based Dole Food Co. as the world's top banana company but will hold the No. 2 slot behind Dole in the U.S. ChiquitaFyffes will be the U.S. market leader in packaged salads, its top melon importer, and the third-largest pineapple distributor in the U.S. and Europe.

The combination will bring two companies back together nearly three decades after a part of what is now Fyffes was sold in 1986 by United Fruit Co., which later became Chiquita.

Separately on Tuesday, Fyffes raised its target for adjusted 2014 Ebita to between 38 million euros ($50 million) and 42 million euros from a previous target of between 30 million euros and 35 million euros. 2013 Ebita was 32 million euros. Shareholders of both companies are set to vote on the deal in separate meetings on Sept. 17.